Synergy and internationalization: the trump

cards of large-scale distribution

Best performing chains and first-class collaborations

In the race towards innovation, given the chance, PL businesses bet on the internationalization of production processes to attract even more customers and meet their need for traceability and safety. However, some brands may want, or need, to walk a different path and foster excellent collaborations with companies- known for their reliability and social commitment - that combine business and ethics, craftsmanship and mass consumption.

LARGE-SCALE DISTRIBUTION AND CONSUMERS: HUNGER (FOR NEW NEEDS) SHARPENS YOUR WITS

In the first months of 2022, the private-label turnover in Italy amounted to 9.6 billion euros overall, 9.5% more compared to September 2021. This was revealed by the position paper ‘Marca del distributore e consumatore nella società che cambia’ (PL and consumers in a changing society) by Forum Ambrosetti, in collaboration with Ipsos and Adm, presented at Marca 2023 exhibition. Like any other human phenomenon related to economic and social-cultural choices, there may be different reasons behind data. And the ability of large-scale distribution to identify and anticipate the new needs of consumers in terms of ‘supply characteristics and complexity’ is one of those. According to the paper, consumer needs fall within 4 macro categories, namely food experience, services, free time, and wellness. Indeed, today more than 500 points of sales in Modern Distribution provide services such as OTC pharmacies, optical stores, perfume stores, cafés, pet stores and gas stations. The agri-food sector, specifically ‘extended agrifood supply chains’, is the hard core of PL . As a matter of fact, private labels in this segment have grown about 3.7 times more than the brand food industry. Therefore, the behind-thescenes story of quality products, as well as new formulas (e.g. food courts, cafés, bakeries and pasta factories), translates into ‘new initiatives‘’ for pos, i.e. supermarkets and hypermarkets.

€ 9.6 billion (+9.5% compared to September 2021 = overall private label turnover.

BREAD AND BAKED PRODUCTS IN LARGE-SCALE DISTRIBUTION: SNAPSHOT OF A SHIFT

With 250 traditional types estimated, Italy is the land of bread par excellence, specifically of artisan bread, which reached 84.1% in 2021. Despite the leading role of bakeries and small shops, bread and baked products recorded a significant increase in large-scale distribution (currently 43.5%).Discounters have made a leap forward after widening their bake-off supply as a result of the loss of purchasing power due to the Covid-19 pandemic and the crisis hitting the years 2022-23. It’s the case of Penny, Lidl, which currently supply 50 different types of sweet and salty baked products in all (croissants,muffins, doughnuts, pizzas and focaccia bread, traditional bread),and Aldi,where 85% of the bread supplied is PL.

IPER-LA GRANDE i: RESTAURANTS AND INTERNATIONALIZATION OF BAKERIES AND PASTA FACTORIES

Iper-la grande “i” is among those that have walked both paths, starting with a great classic, its bread and pastry production. “Everything is processed right before the eyes of our customers, from raw materials to finished products,”pointed out Marilena De Leonibus, Bakery and Pastry Coordinator at Iper-La Grande i. Our thought goes to pastry, pizza, and chocolate laboratories in Iper pos. As for tomato-based products, such as meat, Arrabbiata and Amatriciana sauce, lasagna and eggplant parmesan, Mutti is the brand standing out. Also fresh pasta is produced in-house, from dough to the filling. “Our leading reference is braised beef ravioli, which are also available with vegetable or cheese filling. We’re always trying to add new products to our supply” claimed Giuseppe Calogero and Cristian Adelghi, Food and Distribution Coordinators at Iper-la grande “i”. The company had already expanded beyond the food sector in 2016 entering the beverage industry with its BellaFresca brand. «It’s an ambitious project that’s been consolidating our positioning as manufacturers to this day.»

According to recent research carried out by Deloitte titled ‘Foodservice market monitor’, the food service market will be driven by full-service restaurants, with a +9.3% estimated growth between 2021 and 2026, as a result of the greatest importance of casual dining. It should be no surprise that also Iper-la grande “I” tried to revolutionize the idea of ‘aisles’ in its points of sales by creating actual restaurants, each with its own concept. In the last 11 years, 8 restaurants have been opened, four of which in difficult times, between 2020-2021. From Musi Lunghi, the first one, opened in Iper Lonato in June 2012, to Macelér, opened in Iper Seriate on February 2, 2023. As for the menu of La Corte di Maestoso, which opened in Monza on December 5, 2019, «We decided to include a product imported by one of our suppliers, Giraudi, which is the American Black Angus meat from Creekstone Farms. There, animals’ breeding is hormone-free in compliance with directives safeguarding animal well-being», explained Stefano Arzillo and Salvatore Biondo, Food service Coordinators . «Macelér’s menu is instead characterized by Carnitalia ’s selected meat, the purchasing platform of Finiper Group, whose leading products are the Irish T-bone steak and the heifer sliced steak».

SELEX: A TRULY ‘EXCELLENT’ COLLABORATION

Last year, Si con te (Cedi Marche), a supermarket chain owned by Selex Group, started a collaboration with Frolla, a small all-Italian cookie factory in Osimo, the brainchild of two young men, an aspiring pastry chef and a social worker. Thanks to their dedication and commitment, Frolla is now a true business employing young disabled people. The products of this lab-company have been included and displayed in the Group's stores among the excellences of the area. .. And the great thing is that they’ve become an excellence themselves, as, in November 2021, Frolla was awarded with the ‘European Citizen’s Prize’ by the European Parliament.

ESSELUNGA: THE CONCEPT OF ELISENDA BAKERIES AND CUCINA ESSELUNGA

The undisputed protagonist of this collaboration is undoubtedly Esselunga. Their brand Elisenda was designed to add that something extra in customers’ everyday shopping, that only high quality pastry products can boast . Created in 2016 from the meeting between the brand and the 3 Micheline-starred restaurant ‘Da Vittorio’, today Elisenda is present in over 100 Esselunga points of sales. In collaboration with the Cerea Brothers, Enrico “Chicco” and Roberto, who also contribute to the management of the pastry lab in Pioltello (Milano), the recipes, are conceived by experts trained in the Cerea brothers’ restaurant in Brusaporto (Bergamo) on a daily basis. New products have recently been added to the assortment, such as

Over 500=large-scale distribution points of sales with OTC pharmacies, optical stores, perfume stores, cafès, restaurants, pet stores and gas stations.

the Colomba Easter cake, available in the classic or chocolate version, and the Venezianina, a soft, buttery pastry product with a Madagascar Bourbon vanilla aroma, topped with an almond glaze and granulated sugar . Something new was also introduced in the range of Elisenda’s flagship product, macarons. A new flavor, hazelnut, is now available alongside vanilla, chocolate, pistachio, strawberry and lemon. However, the Lombard brand hasn’t just started excellent collaborations. As a matter of fact, it has also consolidated its role in Spadari street- better known as ‘la via del gusto’. Here, Elisenda is now challenging the appeal of the historic Peck delicatessen, which has been displaying its products in this district of taste since the early 1900s. In the Le eccellenze di Esselunga (Esselunga’s excellencies) store, the brand Cucina Esselunga (Esselunga’s Kitchen) made its debut in December 2022, alongside different local specialties.

Including a # to encourage people to taste the beer (#daassaggiare), this slogan was used to launch the BellaFresca beer by Iper-la grande ‘i’ in 2016. This unpasteurized and non-micro filtered beer is produced in Arese (Milano) and in the Stores in Seriate (Milano) and Monza. It’s supplied in Iper points of sales as draft beer and is currently available in 4 different flavors ranging from 4.3 to 5.9 ABV: Blanche, an opalescent, spicy and slightly sour beer, Golden, light-colored and easy-to-drink ApA, copper-colored and not too foamy, and Bock, ruby-colored with a sweet aroma of roasted and caramelized malt.

ALDI: PEDON ORGANIC LEGUMES AND MONTI TRENTINI DOP ASIAGO CHEESE

Recently, Aldi has dethroned ‘the big four’ of large-scale distribution in terms of affordability. In fact, it’s the most affordable discounter in Italy (based on data by Altroconsumo in 2022), where a 4-person family can save up to 3,350 euros yearly, compared to 8,550 euros spent on average (Istat data). However, affordability alone isn’t enough to meet customers’ expectations. As a matter of fact, 37.5% of customers expect an ever more premium PL for the future, and discounters are no exception. For this reason, at Aldi’s, the lentils, spelt, chickpeas and barley of ‘Natura Felice’ line, 100% Italian and organic, come from the fields and silos of Pedon S.p.a. This family-run business located in Colceresa (Vicenza), was founded in 1984 by three brothers, Remo, Sergio, and Franco and has been cultivating legumes, cereals and seeds for over thirty years now. The Dop Asiago cheese of the ‘Gourmet’ line is also produced in the province of Vicenza, by Casearia Monti Trentini, a company based in Enego. Casearia Monti Trentini has over 100 years’ experience in cheese making, and uses 100% Italian milk from cows bred in the Venetian plateau. First cut in in pieces of 300 grams each, the cheese is then vacuum packaged.

Large-scale distribution in extended agrifood supply chains

‘Extended agrifood supply chains’ are one of the ‘4 As¹’ (automobile, clothing, agrifood, and furniture) of the Made in Italy industry, as well as the most significant in terms of figures with 124.9 billion of added value in 2021 and over 3 million and 300 thousand employees. In this sector, large-scale distribution is either involved simply as a retailer or all-round with private labels, when, at the end of its ‘journey’, a product is given a brand label or distribution group. Private labels comprise about 50 economic sub-sectors. In all, large-scale distribution supports 1500 companies working in production and related intermediate stages. 92% of them are Italian, 61.5% of which are SMEs. Large businesses, however, don’t disdain the idea of becoming copackers (38.5%).

LIDL: THE PRIVATE LABEL TOMATO SAUCE FOSTERING INCLUSIVENESS

Produced with controlled and quality raw materials, PL lines, or even single PL products in discounters,represent a great opportunity for partners to foster valuable projects and even solidarity projects In fact, PL products in discounters make up for 80% of the assortment. A case in point is Lidl Italia with its ‘Italiamo’ tomato sauce. The product is produced using 100% Italian tomatoes thanks to the work of Coldiretti farmers, and it’s part of ‘Fdai’ products (Firmato dagli agricoltori italiani - Produced by Italian farmers). For each bottle purchased from March 20 to 2, April 2023, sold at 1.19 euros, the German discounter donates 20 cents to PizzAut, the Italian chain of pizzerias and non-profit organization, which employs people with autism. At the end of the initiative, Lidl will double the proceeds and donate them to this non-profit organization. And when it comes to social inclusivity, there’s no better place than a pizzeria and its pizza, the symbol of conviviality par excellence, whose main ingredient is nothing more than tomato.

CARREFOUR: A CITY VEGETABLE GARDEN BY POTAGER CITY

Last but not the least, a European example: Carrefour . In its birthplace, France, it started collaborating with quality producers, a winning move on the chessboard of competition. In its first two Potager City (a vegetable garden in town) points of sales in Paris, opened in early March in Rue de Tolbiac and Rue de Seine, 170 food references are currently available, alongside a fruit and vegetable assortment. The references were created in collaboration with Omie & Cie , a B-Corp-certified food brand committed to fighting climate change. About 40 different wine references, selected in collaboration with Le Petit Ballon , and self-service fresh products, such as cheese, dairy and cold cuts, for a total of 230 items, complete the supply. Addition to the physical stores,fruit and vegetables can be ordered on its e-commerce platform and then collected in store.

In Conclusion

Ipsos statistical surveys show that the relative majority of Italians (47%) choose where to shop based on proximity to their house or workplace. However, for large-scale distribution labels one principle still applies: they can’t rest on their laurels, but should rather face the future with minor, yet frequent, innovative ideas. By doing so, they won’t be considered outdated or, worse, unalterable. l

THERE'S ERIC GOUSSEN, SALES MANAGER AT DECATHLON ITALIA , TO TALK WITH PL MAGAZINE.